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Top 1 Percent Control 42 Percent of Financial Wealth in the U.S. – How Average Americans are Lured into Debt Servitude by Promises of Mega Wealth

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October 21, 2010 – Comments (39)

 "At many stages in the advance of humanity, this conflict between the men who possess more than they have earned and the men who have earned more than they possess is the central condition of progress. In our day it appears as the struggle of freemen to gain and hold the right of self-government as against the special interests, who twist the methods of free government into machinery for defeating the popular will. At every stage, and under all circumstances, the essence of the struggle is to equalize opportunity, destroy privilege, and give to the life and citizenship of every individual the highest possible value both to himself and to the commonwealth......

"No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar?s worth of service rendered?not gambling in stocks, but service rendered. The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective, a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate." - Theodore Roosevelt

 

Swiped, in its entirety from the 'My Budget 360' weblog.

 Top 1 Percent Control 42 Percent of Financial Wealth in the U.S. – How Average Americans are Lured into Debt Servitude by Promises of Mega Wealth

Many Americans are not buying the recent stock market rally.  This is being reflected in multiple polls showing negative attitudes towards the economy and Wall Street.  Wall Street is so disconnected from the average American that they fail to see the 27 million unemployed and underemployed Americans that now have a harder time believing the gospel of financial engineering prosperity.  Americans have a reason to be dubious regarding the recovery because jobs are the main push for most Americans.  A recent study shows that over 70 percent of Americans derive their monthly income from an actual W-2 job.  In other words, working is the prime mover and source of their income.  Yet the financial elite have very little understanding of this concept.  Why?  42 percent of financial wealth is controlled by the top 1 percent.  We would need to go back to the Great Depression to see such lopsided data.

 

Many Americans are still struggling at the depths of this recession.  We have 37 million Americans on food stamps and many wait until midnight of the last day of the month so checks can clear to buy food at Wal-Mart.  Do you think these people are starring at the stock market?  The overall data is much worse:


Source:  William Domhoff

If we break the data down further we will find that 93 percent of all financial wealth is controlled by the top 10 percent of the country.  That is why these people are cheering their one cent share increase while layoffs keep on improving the bottom line.  But what bottom line are we talking about here?  The Wall Street crowd would like you to believe that all is now good that the stock market has rallied 60+ percent.  Of course they are happy because they control most of this wealth.  Yet the typical American still has negative views on the economy because they actually have to work to earn a living:

The above daily poll asks Americans about their view on the health of the economy.  Only 13 percent believe the economy is good or excellent.  Funny how that correlates with the top 10 percent who control 93 percent of wealth.  Many Americans were sold the illusion of the bubble.  They were sold on the idea that their homes were worth so much more than they really were.  And many used this phony wealth effect to go out and spend beyond their means.  They started spending as if they were part of this elite 10 percent crowd.  But once the tide rolled out, it was clear they were not.  And the horribly built bailouts demonstrate who is controlling our political system.  This was not the rule of a capitalist system but a corporate run government.

Just think about the bailouts and which companies were saved.  We ended up bailing out the worst performing and troubled companies thus keeping alive companies that should have completely failed.  Did we bail out Google?  Proctor and Gamble?  Of course not.  These companies actually produce something that people want.  Banks and especially the Wall Street kind merely keep that 42 percent happy by making sure their stock values stay high so they can keep on making money while the average Americans is sold up the river.

Yet many were brought into the easy money fold by going into massive amounts of debt.  And who has most of the debt?  That is right, the average American:

The bottom 90 percent have been saddled with 73 percent of all debt.  In other words much of their so-called wealth is connected to debt.  Debt is slavery for many especially with egregious credit card companies taking people out with absurd credit card tricks and scams.  Yet the corporate propaganda machine is strong and mighty.  Have you ever received an inheritance?  A large one?  Probably not because only 1.6% of all Americans receive an inheritance larger than $100,000.  If this is the case, why in the world do politicians worry so much about the tax impacts of this?  Because they want to keep the corporatocracy alive and well so their spawn can get a piece of their pie.  They give the illusion to average Americans that if you only work hard enough you too can join this elusive club of cronies.  The data shows otherwise.

But if we start looking at investment assets, the true wealth in the country, we start realizing why Wall Street is all giddy about the recent stock market government induced rally:

Of investment assets 90 percent of Americans own 12.2 percent.  The rest goes to the top 10 percent.  Welcome to the new serfdom.  The bailouts that went out to the filthy rich were more about protecting their tiny corner of the world than actually making the economy better.  That is why it is interesting to see companies fire people and Wall Street cheer for the increase in earnings per share.  Good for the few at the expense of the many.  Yet the propaganda out of Wall Street and our government is what is good for Wall Street is good for you.  Just like that 1.6% inheritance issue, the vast majority of Americans won’t deal with that and their primary concern is simply a job.  A job that has provided stagnant wages for a decade while the ultra wealth get richer and richer in a phony form of corporate socialism.

If you break down the data you realize that most Americans don’t have time to speculate in stock markets:

Only 34% of U.S. households make more than $65,000 per year.  What is that after taxes?  Let us use a state like California for example:

Now if we breakdown this data further you will realize that most of the money is consumed by cost of living necessities, not Wall Street speculation.  Just to show this example let us look at a family budget for someone in California making $100,000:

Notice after running the budget we are in the hole for $1,000?  That is because of many costs that typical families have.  We can debate the merits of where they are spending money but the point is this; are these people really making beaucoup money from the stock market?  They are putting away $12,000 a year into their 401k.  As we have now found out, 8 percent a year is never guaranteed in the stock market although the corporate powers would like you to believe that so they can have other suckers to unload stocks onto.

“Yet the median household income in the U.S. is $50,000 and not $100,000.  They have even less to invest.”

They are more concerned on working to have a paycheck to pay for necessities.  They are more concerned about paying their house off by the time they retire and hopefully, have a little bit of retirement funds coming in.  The sad fact is most Americans rely on Social Security when they retire.  All those ads of unlimited golf and daily trips to Tahiti are propaganda of how Wall Street lives and they want to sell you the sizzle, and clearly not the steak.  They live their lives paper pushing and sucking the life out of the productive part of our economy.  The average American should now realize this since this financial crisis was primarily caused by them.  They are now on a massive campaign to blame Americans for this.  This is hypocrisy to the next level.  Many Americans have paid for their mistake by losing their home through foreclosure.  We have 300,000 foreclosure filings a month.  Many have taken a hit to their overall stock portfolio (if they have one).  Yet the corporate cronies have protected their horrible economy crushing debts at the taxpayer expense.  Unlike you, many hold bonds on the companies and not common stock like many Americans.  Bondholders have been protected at all costs during this crisis.  Goldman Sachs through AIG received 100 cents on the dollar for their horrible bets.  The banks have unlimited back stops thanks to taxpayers.  This is how the top 1 percent rule the new feudal state.

Welcome to the 2010 serfdom.  Time to wake up and restructure the system.  Many people are starting to wake up to this massive scam.

39 Comments – Post Your Own

#1) On October 21, 2010 at 6:11 AM, devoish (99.10) wrote:

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#2) On October 21, 2010 at 8:01 AM, Melaschasm (65.55) wrote:

If you really want to 'punish' the wealthy, then you should apply the estate taxes to trust funds, rather than raising taxes on the middle class and barely rich.

Notice that the trust fund party aka the Democrat Party never proposes such a tax. 

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#3) On October 21, 2010 at 8:51 AM, SkepticalOx (99.45) wrote:

I know there's potentially going to be a huge debate on the morality or ethics of income taxes (libertarians: taxation is slavery!) to how well the government spends taxpayers' money (they don't spend it well) - but isn't huge income disparity a risk for the very rich? Does it not breed discontentment or contempt from those who are less well off?

I'm not exactly sure what the best method is, but it's probably in the best-interest of the very wealthy to pay attention. Cause a quick glance at history and you've seen how huge inequality eventually plays out.

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#4) On October 21, 2010 at 9:09 AM, ChrisGraley (30.30) wrote:

You should consider firing squads.

Let me know how the whole "Don't let anyone make money in the stock market!" thing works out for ya.

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#5) On October 21, 2010 at 11:09 AM, rd80 (98.69) wrote:

And many used this phony wealth effect to go out and spend beyond their means.

I suspect you would find that this is THE key discriminator between those able to build wealth and those destined for a lifetime of slavery to debt.

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#6) On October 21, 2010 at 11:41 AM, ChrisGraley (30.30) wrote:

I love how someone can spend above their means and then blame it on someone else.

It doesn't work for our government and it doesn't work for the individual either and yet we still try to do it and then blame the consequences on someone else.

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#7) On October 21, 2010 at 1:12 PM, leohaas (36.25) wrote:

Here is an idea: start living below your means. Don't tell me that to live in California you 'need' $100k a year. If that is true, move somewhere else. I live in NJ, and the vast majority there gets by on quite a bit less (even though we are one of the richest states in the nation with high taxes and a high cost of living).

All people need to do is stop trying to keep up with the Joneses and prioritize their spending. That is difficult for those who are unemployed (10%) or underemployed (another 10%?), but that is very doable for the remaining 80%! Create a budget and track your spending. More going out than coming in? Start cutting!

Stop eating out. Brownbag your lunch. Rent a small apartment rather than buy a McMansion. If you cannot sell your house, let the bank foreclose on it. Drive a 10-year old clunker rather than leasing a new vehicle. Better yet: walk! Get rid of the Wii, iPod, iPad, iPhone, iWhatever, cell phone, DVR, cable, FiOS, Netflix, and all the other unnecessary services and gadgets. Do not go to any mall. Shop at Walmart. Cannot afford Walmart? Go to  flea markets, thrift stores, and visit the food pantry (those who cannot afford Walmart qualify).

Stop paying your credit cards and file for bankruptcy protection. Destroy all your credit cards (no exception) and close your accounts. Pay cash for everything (you can still get everything you need using cash or money orders). Never again apply for credit (you don't need it anyway).

But most of all: be thankful for the bank bailouts. I don't like them either but...

"The bailouts that went out to the filthy rich were more about protecting their tiny corner of the world than actually making the economy better."

Wrong. The bailouts were about preventing the economy from falling off a cliff (AKA the next Great Depression). It was a 100% success. The current economy is bad and so are living situations for millions of poor (many of them former middle class), but nowhere near as bad as they were in the 1930s.

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#8) On October 21, 2010 at 2:20 PM, eldemonio (98.70) wrote:

If we were to redistribute all of the wealth so everyone had an equal share, how long would it take for 5% of us to accumulate 75% of the wealth? 

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#9) On October 21, 2010 at 2:51 PM, TMFCrocoStimpy (95.14) wrote:

If we were to redistribute all of the wealth so everyone had an equal share, how long would it take for 5% of us to accumulate 75% of the wealth? 

I'd give it maybe 5 years, based on studies of lottery winners and their financial situations at that time period.  That said, it does nothing to address the increasingly precarious situation of how far the wealth distribution has skewed and what the underlying drivers have been that got us here.

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#10) On October 21, 2010 at 4:02 PM, chk999 (99.98) wrote:

devoish - is there any personal responsibility to people getting into debt? Or is it all macro factors beyond any personal control?

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#11) On October 21, 2010 at 4:15 PM, starbucks4ever (98.98) wrote:

I would say, it would take about 75 years. Lottery winners are not representative at all.

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#12) On October 21, 2010 at 5:07 PM, allstarvulture (< 20) wrote:

#8- It would take no time at all.  Those who would position themselves to ensure that everyone had an 'equal share' would take the lion's share first and then redistribute the scraps 'fairly'. 

That's the great hypocrisy.  Those who advocate redistribution don't genuinely care about fairness.  They simply wish to supplant those currently at the top of the pyramid with themselves and use populist rhetoric as one of their tools to further that aim.

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#13) On October 21, 2010 at 7:49 PM, ChrisGraley (30.30) wrote:

I didn't have crap when I first started. Strike that, I had less than crap. I got to where I'm at, by living below my means and investing the rest (sometimes wisely).

You can take it all away and I'll get it all back again eventually. Probably in another country, because it will be hard for any to succeed in your Utopia.

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#14) On October 21, 2010 at 8:17 PM, devoish (99.10) wrote:

Chris - I love how someone can spend above their means and then blame it on someone else - Graley.

CHK - devoish - is there any personal responsibility to people getting into debt? Or is it all macro factors beyond any personal control? - 999

Leo - Here is an idea: start living below your means. - haas

Considering that right now, the foreclosure process is stalled dead because the financial industry lied through its teeth you fellas are probably on the wrong side of the "get real" fence.

 CHK999 specifically. Of course some people got themsleves into trouble. Right now they are vast minority compared to those being stolen from at the point of a contract and struggling due to the macros.

As I posted once before and declared to be the truth as I see it;

Some Americans claim that their neighbors are drowning in debt because they are heedless of the risk or because they are so consumed by their appetites to purchase that they willingly ignore the risks. Surely, in such circumstances, it is not the responsibility of regulators to provide the self-discipline that customers lack. Indeed, there can be no doubt that some portion of the credit crisis in America is the result of foolishness and profligacy. Some people are in trouble with credit because they simply use too much of it. Others are in trouble because they use credit in dangerous ways. But that is not the whole story. Lenders have deliberately built tricks and traps into some credit products so they can ensnare families in a cycle of high-cost debt.

To be sure, creating safer marketplaces is not about protecting consumers from all possible bad decisions. Instead, it is about making certain that the products themselves don’t become the source of the trouble. This means that terms hidden in the fine print or obscured with incomprehensible language, unexpected terms, reservation of all power to the seller with nothing left for the buyer, and similar tricks and traps have no place in a well-functioning market.

How did financial products get so dangerous? Part of the problem is that disclosure has become a way to obfuscate rather than to inform. According to the Wall Street Journal, in the early 1980s, the typical credit card contract was a page long; by the early 2000s, that contract had grown to more than 30 pages of incomprehensible text. The additional terms were not designed to make life easier for the customer. Rather, they were designed in large part to add unexpected–and unreadable–terms that favor the card companies. Mortgage-loan documents, payday-loan papers, car-loan terms, and other lending products are often equally incomprehensible -  Elizabeth Warren, 2007

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#15) On October 21, 2010 at 8:47 PM, jdiegelmann (< 20) wrote:

If you think about redistribution of wealth through the natural selection scheme it's easy to see why it's not the best idea to move wealth into the hands of those who weren't adept enough to win the "game" as it was already played. It would be better to direct the money into improving the education system for everyone. This alone, over time, would narrow the gap in wealth.

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#16) On October 22, 2010 at 12:04 AM, ChrisGraley (30.30) wrote:

devoish, I would doubt that any of the 3 of us would have been on the wrong side of the stalling of the foreclosure process. I can't speak for the other 2 guys, but I myself despise banks as much as you do, but while you are trying to focus on making them suffer financially, I just try to make sure that they don't make me suffer financially. That's why I read all the contracts that I sign. Any time anyone pushes a contract in front of you, they are trying to succeed on your stupidity. If you really want to find a few villains, you should look at a few of those lawmakers in your own party that claim that they didn't have anything to do with the real estate bubble when they in fact created it.

Everyone is greedy including your side. You could work yourself into riches if you want to. All you have to do is live below your means and invest the rest. The truth is that you don't want to work for what you want to the extent that  the article above claims. It's much easier to claim that all of the people that did struggle, scratch and claw despite the same obstacles didn't really scratch their way up, but only succeeded from your expense. The guy that got the dollar to invest, got it from the same place that you did. He worked for it. You spent it on a flat screen TV and blame the bank because you have to borrow money to fix the family grocery getter. The other guy invested it  and when the family grocery getter broke down, he paid cash to get it fixed.

I've made a bunch of stupid financial decisions in my life, but I've always been responsible for my own mistakes. You know, I still don't own a credit card. I get plenty of advice on this very site that I should still use a card to get points or rewards and pay off the balance every month.  I shy away from it because it doesn't fit with the way I got to where I am.

I know it makes you feel good to paint me as a villain.You didn't succeed only because guys like me were out to get you. Shame on guys like me for making money. We only must have made money with schemes of taking it away from you.

I'll close with a story about Mrs Tish. A lot of you know from my other posts that I spend a lot of my time taking care of my grandfather. Mrs Tish had lived across the street from my grandfather before I was even born. She was a very nice lady. She lost her husband when I was at an age where I was still wearing diapers. She pinched me on the cheek a lot as a kid. She has 2 grandsons about my age, and they did a pretty good job of taking care of her. About 12 years ago, 1 of the grandsons asked me to talk to Mrs Tish about her finances. Her deceased husband used to work for the post office. He had a pretty good retirement plan, but I remember 12 years ago telling her that having 33% of her retirement money in GM bonds was a bad idea. I don't know if she took my advice. When GM became government motors and the party in power stole money from the bondholders and handed it over to the unions, Mrs Tish was in the hospital. She never left the hospital, may she rest in peace. I tried to call the 2 grandsons, but the contact numbers I had were too old. I was hoping that she took my advice 12 years ago, but I couldn't help to think about a lot of other seniors in the same boat. It's easy to take money away from people that you can paint as evil, but I have a hard time believing that anyone could paint Mrs Tish as being evil. On devoish's planet, they took all that money from the evil banks and gave it to the champion unions. They really only stole money from the retirement funds from old ladies like Mrs Tish.

devoish plans to make you feel guilty enough to give him permission to steal from the evil people. Mrs Tish wasn't evil. She barely understood her investments. As a kid, I hated getting my cheeks pinched, but as an adult I hate not seeing Mrs Tish. I understand the life cycle and I understand how people come and go, but the thing that bothers me the most is that I don't know if Mrs Tish was raped by our government. I do know that 12 years ago, she had assets that should have carried her for a lifetime. Her house was foreclosed on after she died.

Her grandsons have done a much better job on her property than I have done on my grandfather's. It's a showplace.

I really miss Mrs Tish. Too bad she is one of those evil people that devoish can blame on ruining your life.

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#17) On October 22, 2010 at 8:09 AM, devoish (99.10) wrote:

You should add something about fond memeories of the sweet fragrance of Miss Tish's baking to that story.

At this stage of my life I guess i am forced to acknowledge that finding the time to read and understand the fine print in every contract, credit card, phone, cable, home insurance. car insurance, health insurance, tmf website, all written in an unknown language where the meaning of words are not the same as I use them every day - legalese - is beyond my ability and i need help. Between long hours at work, long commutes home, the difficulty in even getting to see a contract before you sign it, and not having it delivered until afterward is more than I can handle. Accepting employment where that health contract is negotiated for me by an employer and her finances are protected ahead of my health is difficult for me to handle.

So I need help. And I have found, and I think most Americans are finding, that the integrity of those who profit on the other side of a contract often cannot be trusted. Especially those who believe that the personal accumulation of a Nations wealth is their highest calling and entitlement and measure of success.

So I want a third party - answerable to me at election time - to help me. I have also learned that if this third party promises they will not do their job and abdicates responsibility to those on the other side of my contract, they will keep their paychecks and that promise. Therefore I will not vote for anybody who says "government is the problem".

It is essential that there should be organization of labor. This is an era of organization. Capital organizes and therefore labor must organize. - Theodore Roosevelt

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#18) On October 22, 2010 at 2:59 PM, FleaBagger (29.42) wrote:

Call me naive, but I don't even see the need to read credit card contracts and other loan documents. Just skip to the parts where the payments and interest rate are fixed as long as you're current, and then stay current. It's still about living below your means. I've yet to see a contract in America where a bank can sell your kids into slavery in Asia if you get behind, or even where a credit card puts any of your assets on the hook for default, and the industry has universal standards that are enforced not by the government (thank God), but by competition. If a consumer is going to be taken advantage of, he's going to be taken advantage of by any bank, and those who don't go for ARM's and nonsense like that are not going to be taken advantage of.

If you're really worried about a contract, buy a $20 digital audio recorder at Walmart (I can show you where, if you come to the Hwy 70 and Tower Rd Walmart in Aurora, CO), and record everything the bank rep tells you. Any lawyer in this country can use that to turn a PR faux pas into a profitable settlement. If you're imaginative about which buttons to push, you probably don't even need the lawyer. 

Bottom line: there's no reason for any entity (including the government that taxed us and gave our money to banks) not to be responsible for his/her/its own actions. 

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#19) On October 22, 2010 at 5:15 PM, devoish (99.10) wrote:

Flea,

You are naive. At least I think so.

Take a look at your CC contract for us and post the part that says the payments and interest rate are fixed as long as you're current. I do not think you will find it and if not, perhaps you would consider some sort of leash on the CC companys so they have to say that.

I think it is the belief that you just expressed not being true that gets most of the people in trouble who get into trouble.

In fact this is a great opportunity. We have ChrisGraley monitoring this thread who reads and understands his contracts, and me and flea who struggle to. Perhaps Chris could help us both out by describing the typical language that a CC company uses to ensure us that our percentage rate is fixed as long as we stay current on our payments.

Are you up for it Chris?

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#20) On October 22, 2010 at 6:16 PM, ChrisGraley (30.30) wrote:

The Credit Card thing would be a bad choice devoish. I don't own any credit cards and have little experience with CC contracts.

Consumer credit is evil and designed to get you deeper in the hole than when you started.

Do yourself a favor and save up for what you want to buy.

I didn't think I would receive any sympathy for Mrs Tish devoish, but I would at least think you would admonish the criminal act of stealing from Mrs Tish for the benefit of the big unions that donated money to the campaign funds of the culprits that stole her money.

Don't you champion the rights of the weak over the strong and powerful devoish? Or does that only apply when the strong and powerful aren't members of your party? 

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#21) On October 23, 2010 at 8:46 AM, devoish (99.10) wrote:

Don't you champion the rights of the weak over the strong and powerful devoish?

No.

I want the strong and the powerful to have the same safety nets as the weak, should they need them. Unemployment, SSI, and single payer healthcare.

Now, unless I have misread you, you want to cut Mrs Tish's SSI benefits because balancing the federal budget is more important than the many Mrs Tish's who lost money on bonds and stocks and in their 401ks.

You want her to buy healthcare at her own expense and at the risk of purchasing a bad policy from an insurer, who we can learn to avoid in the free market, if we all find out later is a criminal at Mrs tish's expense rather than fund medicaid or single payer healthcare.

Mrs Tish is why I think yours are bad ideas.

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#22) On October 23, 2010 at 12:44 PM, ChrisGraley (30.30) wrote:

You did misread me devoish.

 I want to force the strong and the powerful to have the same safety nets as the weak, should they need them. Unemployment, SSI, and single payer healthcare.

I fixed the above statement for you.

I don't want to cut Mrs Tish SSI benefits. I do want them supported by real cash and not government IOU's. I do want the program to be solvent and self sustaining. I also want people like Mrs Tish to have options other than SSI. She had her husband's government pension as well for example. Mrs. Tish only lost money with her GM bonds because your President committed a crime and stole from her. 

Mrs Tish was already buying healthcare at her own expense. It was a much better option for her than medicare because her husband was an employee of the postal service. Even so, I don't want to remove medicare, I do want it to be solvent and self-sustaining and I do want people to have other options.

Don't even try to bring up a possible criminal act by the insurance companies if you won't acknowledge the above criminal act by your President. You may want to also bring up the fact that the single payer system that you are supporting is both illegal and unconstitutional as well.

I know in your head, you believe that an all powerful government in control of everything will do no wrong and will take care of all of us. It's amazing how you can ignore the President stealing from old ladies in the same thought process.

Mrs Tish is exactly why your plans will never work. You'll ignore crimes committed by the government when your party is in charge and you want them to be in charge of everything.

You take away her choices until she is left with one option and you support the corruption of that only option. Your argument that you need to protect her from one of her options being criminal by giving her only one option that will definitely be criminal amazes me.

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#23) On October 23, 2010 at 4:06 PM, devoish (99.10) wrote:

Easy there big fella. Don't go all over the top unconstitutional illegal crying and screaming because you got called.

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#24) On October 23, 2010 at 5:14 PM, ChrisGraley (30.30) wrote:

I'm quite calm. I did point out that you are willing to overlook the criminal actions the people that you want to be the only game in town. It's the fly in the ointment. They have to be the only game in town so they can protect us, but you are willing to overlook enough to let them exploit us and we can't choose to go elsewhere.

You still haven't admitted that a crime was committed. Is that supposed to make us trust you more while you demonstrate the only game in town will be a rigged one?

 

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#25) On October 23, 2010 at 6:00 PM, lctycoon (< 20) wrote:

ChrisGraley: This is why a having a second passport can be a very good idea... ;)

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#26) On October 23, 2010 at 6:17 PM, ChrisGraley (30.30) wrote:

3 or 4 is even better lctycoon.

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#27) On October 24, 2010 at 12:48 AM, devoish (99.10) wrote:

No crime was committed.

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#28) On October 24, 2010 at 9:48 AM, ChrisGraley (30.30) wrote:

Theft is a crime. The fact that you won't admit it just shows why your plan where the government controls everything will never work.

You are willing to overlook such an obvious crime and that demonstrates what you'll overlook when they have total control.

It's still a crime when the stolen money is given to the unions.

Why do you recognize theft when the stolen money is given to GS, but not when the stolen money is given to the unions?

Even the smallest amount of corruption destroys your plan for one and only option and you are already enabling obvious corruption.

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#29) On October 24, 2010 at 6:51 PM, devoish (99.10) wrote:

Chris,

You are rambling incoherently.

Money was not stolen. Bondholders accepted the deal in a negotiation rather than take a trip before a bankruptcy judge. They did so because the deal was better for them that way.

 

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#30) On October 24, 2010 at 9:48 PM, ChrisGraley (30.30) wrote:

Let's see....

The Unions got a 39% equity holding for their $10 bil claim and the bondholders got less than a 10% equity stake for their $27 bil claim.

The bondholders had all of the bargaining power because if GM went to bankruptcy, they would then be allowed to tear up the current labor agreement with the union. The government couldn't let that happen.

Bankruptcy was political suicide for Obama, so what actually happened?

This 

and this 

and this

and this,

this one is from the national legal and policy center it talks about ethics 

I know your point is that it can't be stealing when the government does it, but contract law was in fact broken. The same people that you wanted to protect from those evil credit card contracts are the same people that got screwed by their own government only this time they were screwed even though contract law was on their side. The law was on their side, but the government enforcing it was not.

The same government that wants to control everything. The same government that will escalate the corruption when they control everything. The path that you want leads to Venezuela.

I think I'm quite coherent.

If you want me to trust the government to have that much control, then you have to prove to me that they will be held accountable. 

The only thing you are proving is that you are willing to sponsor the corruption when it's to a political advantage.

Your staunch denial of wrongdoing is the biggest demonstration of why it won't work. You'll sponsor corruption when you agree with it no matter who gets screwed in the process.

Take a look at those first 2 links that I posted. Those people have names.

If your not going to protect them, don't pretend to protect anybody. 

 

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#31) On October 24, 2010 at 10:27 PM, Mstinterestinman (27.21) wrote:

I think the agreement was probably shady imo the the unions almost seem too powerful at this point.

P.S.

Chris is right that if your responsible with your money and educate yourself its a lot harder to be taken advantage of never assume someone will deal with you at face value. I have a cc but never carry a balance and dont plan to.

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#32) On October 25, 2010 at 9:32 PM, devoish (99.10) wrote:

Link #1

Most of the investors holding $27 billion in GM debt are big banks and institutional firms, but apparently Mom and Pop-type investors hold about $7 billion in GM bonds.

Unlike the big firms, they’re generally not secured: They can’t demand collateral if GM defaults, and for the most part they didn’t buy financial insurance to hedge against the risk of losses. So in bankruptcy, they go to the back of the line, where they’ll be lucky to recover even a small portion of their investment.

Well, I guess the Government got them something, which wasn't much worse than the nothing. Perhaps they should be thankful for the Government and upset at their financial advisors. At least they still have their pensions, SSI and Medicare.

Link #2; General Motors turns to bankruptcy today in the hopes of finding a new start. The move comes after a majority of those holding $27 billion in GM bonds agreed to swap that debt for a stake in the new General Motors

Agreed to swap because it was their best deal. Nothing about theft yet. And then an iinterview with a lady who should probably be more upset at her investment advisor than the government who got her more than her bonds were worth. She seems to feel entitled to morer and she did not lose her pension, SSI or medicaid, I guess she would like universal healthcare guaranteed too. But that's the dark side of "no entitlements". Just so you know, I do care about her. That is why we should all have the same floor. Heathcare, increased SSI, and a roof.

link #3;

All this talk about a bankruptcy filing is pure posturing. The real goal is to scare enough bondholders into accepting as low a settlement payout as possible. With $28 billion in bonds, if they can scare even 60% of the bondholders into taking the rumored 8 cents cash, 16 cents of new debt and 90% of the equity (worth maybe 12 cents), they will have converted $16.8 billion of debt into equity at a cash cost of $2.2 billion. That would be the best-spent money in this entire government bailout. Would they really forgo this sure thing for the uncertainties of the alternative?

Apparently it was not posturing, and the bondholders took the best deal they could get, ratther than "uncertainty.

link #4; That point must be so important you repeated the link.

link #5, Your ethics link;  It is unethical to characterise the warrant GM bondholdes got as "an some warrants" when the represent an opprotuunity to own more GM equity than the union, or the deal you seem to think they deserve after not working for GM their whole lives.

So let's review the poor robbed Mrs Tish's situation.

She went from "link #1" - Unlike the big firms, they’re generally not secured: They can’t demand collateral if GM defaults, and for the most part they didn’t buy financial insurance to hedge against the risk of losses. So in bankruptcy, they go to the back of the line, where they’ll be lucky to recover even a small portion of their investment. where she had nothing, to

"link # 5" where she has a 10% equity stake in a debt free car company with warrants to get that stake up to 25% of a debt free car company with a 19% market share. Nissan is valued at 35bil with a 9% market share.

Note to Chris; That wasn't a theft, it was a gift.

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#33) On October 25, 2010 at 11:05 PM, ChrisGraley (30.30) wrote:

Remind me never to get into a gift exchange with you at Christmas time.

It was government supported theft and who could they turn to to police it? The government didn't have their interest in mind.

Back of the line for the bondholders was still in front of the unions. Funny how the unions wound up with the biggest piece of the pie.

Their biggest flaw was they didn't contribute campaign funds to the guys in charge like the unions did. The unions deserved less than nothing because it was their impossible labor demands that drove the company to the ground in the first place.

I'd say that the unions got a gift, but technically they did pay for it. Just like any other type of government control, you just have to know who to bribe. 

I do notice that you left out how they bypassed the judicial system and congress and put an ex-hedge fund manager that was mixed up in a pay for play scandal in charge.

I'm sure it was all on the up and up though and everyone should entirely trust their government to take care of them in a similar fashion.

Just remember to bend over when the government gives you your gift. 

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#34) On October 26, 2010 at 4:25 PM, devoish (99.10) wrote:

Thanks for the insight Chris. The unions wound up with the smallest piece of the pie, 17.5% and warrants for 2.5% more. Bondholders wound up with 10% plus warrants for 15% more. Funny how your ethics guy brushes those warrants off.

No matter where in  line you are, after everything is gone it doesn't matter much. Nothing left is nothing left, our emotional issues notwithstanding.

I would agree that the unions got a gift, but lees of one than the bondholders got. In a better run Country - like Qatar - everyone would stand in line behind debts owed to employees. That however is an issue for Congress.

Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration."   Abraham Lincoln and Theodore Roosevelt.

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#35) On October 26, 2010 at 9:21 PM, ChrisGraley (30.30) wrote:

Glad you brought up the warrants devoish! The Unions got some too and I'll let let Ron Gettlefinger tell you about them in just a sec.

I have to talk a little about your math above on who got the biggest piece of the pie. I'm not sure why, but the union's healthcare fund, got the bulk of the windfall as far as equity. (About 60 cents per dollar of claim vs about 6 cents per dollar for the bondholders) Why do they need this when the new government healthcare system will take care of everyone?

Now you were the one that brought up everyone's place in line devoish. The small bondholders were in the back of the line  in your post #32. They should thank the government because they got a gift. Only wait a minute... the unions were standing behind all the bondholders!!!!! (even the ones in the back of the line!)

I have to quote you now! 

I would agree that the unions got a gift, but lees of one than the bondholders got. In a better run Country - like Qatar - everyone would stand in line behind debts owed to employees. That however is an issue for Congress. 

So much good stuff in one tight little quote! 

I'll let David tell you about the flaws of Qatar's system. 

First of all, Congress got bypassed in the whole bailout process. Now correct me if I'm wrong, but this should fall under appropriations. The Congress should be carrying the ball and not carrying the water, but I'll not diverge anymore on this path other than the fact that the Judicial system would need to sign off on the authority of Congress to break new ground. Hopefully, someone else will take that statement and run with it. Second of all, the unions didn't get a gift. They got a bought and paid for bribe. They paid enough to leap ahead of all bondholders in the equity settlement. (Not just the ones in the back of the line.) I know ! I know ! You're gonna point out that I'm leaving out the warrants. I'm not leaving them out. Your messiah, the holy Ron Gettlefinger will put those in perspective in just a moment.

I will bring up just one small point on the warrants. The US government owns about 3/4ths of the company and they need to unload all of that stock. If they are able to unload this stock as quickly as the next 20 years I'll be very impressed.It's going to be very hard for the company just to maintain their value as our government dumps it's stock. For any of the warrants to be valid though, GM needs to be a $75 bil company again. If the government can dump their stock in 20 years, they might become a $75 bil company again in 30 years. They can't really compete until the government unloads everything though. This is assuming that the union will not try to be a majority shareholder, which would be easy for them to do since they bought the US government who is the current majority shareholder today.

OK, I could go on for about another hour on how the bondholders got screwed, but it's time for those poor misunderstood unions to explain those warrants to you.

 

America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves. -Abraham Lincoln  

Behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people. -Theodore Roosevelt  

I'm imagining devoish right now, bending over and thankful for his government gift.  

 

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#36) On October 27, 2010 at 12:04 PM, devoish (99.10) wrote:

Imagine again.

You have gone to a lot of trouble to show us that the warrants the union got cannot be excersised until GM is valued at $75bil, making those warrants essentially worthless at least for a long while.

Of course, not all warrants are created equal. The warrants the bondholders got excersise at much lower price points, two sets of bondholder warrants two different price points. $15bil and $30bil. Way in front of the unions. Nissan, which has a market cap of $38bil sells less than 1/2 the cars GM does. The bondholder warrants are worth an awful lot more than the Unions - it is almost as if they are ahead of the unions in line.

I'm not sure why, but the union's healthcare fund, got the bulk of the windfall as far as equity. - ChrisGraley

Over one year prior to the bankruptcy the union contracted to remove the legacy liabilty of the healthcare by allowing GM to fund it at less than full value (a concession) and then the union would become responsible for managing it. That agreement was to be funded and implemented one year after it was agreed to. During the bankruptcy the union conceeded to accept a lower than negotiated amount - you say $.60 on the dollar in equity.

The company went bankrupt. The bondholders are supposed to lose money at that point. They were paid interest to accept risk.

That US law suggests they should be paid ahead of debts owed to employees is a bad law and should be changed by Congress.

The law that allows business and government to not fully fund pensions is why they are underfunded today. It allows business and gov to arbitrarily decide they will earn 8% on investments and pretend that it is real and employees are secure - until it is not.

These laws are wrong and need to be changed. "Business friendly" politicians are not who I want to vote for.

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#37) On October 28, 2010 at 1:46 AM, ChrisGraley (30.30) wrote:

Hmm.. lets see...

Both the UAW warrants and the bondholder's warrants have to be exercised in the next 5 years. GM has the same chance of being worth $30 bil in the next 5 years as it does being worth $75 bil. That chance is just about zero. The $15 bil valuation is possible, but not very probable. 

Yes, Nissan does sell half the cars that GM does and is worth $38 bil but Nissan doesn't have the legacy costs that GM does and doesn't owe $60 bil to the US government. GM still has higher legacy costs than every other auto company including Ford by a wide margin.The bailout plan was more concerned with bailing out the union than bailing out the company so the legacy costs weren't really addressed. The highest GM has ever been worth is $56 bil and that was a decade ago. They own more than that to the government now. While the quality of their cars has improved recently, it's still way behind most other companies. They had to cut corners on quality because of high legacy costs.

As far as the healthcare thing, I think you missed the point of my ribbing devoish. The government is going to totally take care of all their healthcare needs, so they don't need the extra healthcare coverage.

Yes if the company went bankrupt, it makes perfect sense that the bondholders lose money, but only after the stockholders lose everything. That means the UAW should have got nothing and not 60%. They were treated differently than every other stockholder.

That US law suggests they should be paid ahead of debts owed to employees is a bad law and should be changed by Congress. 

Thank you for that statement devoish. At least you're willing to admit that Obama broke the law. You may not agree with the law and that's OK, but Obama was sworn to uphold the law. If he didn't bypass Congress, they could have changed the law enough to make what he did legal before he committed a crime. It would have still been wrong, but it would have been legal. As it stands now, I don't think GM could ever price a bond to make it attractive enough for me to buy. The risk of the government ignoring my claim is too great.

The law that allows business and government to not fully fund pensions is why they are underfunded today. It allows business and gov to arbitrarily decide they will earn 8% on investments and pretend that it is real and employees are secure - until it is not. 

I totally agree with that statement devoish. 

These laws are wrong and need to be changed. "Business friendly" politicians are not who I want to vote for. 

I can infer that enough from your previous statements devoish, but the politicians that you vote for better be business friendly or nobody will have a job. Business friendly is not always enabling business corruption. Business friendly should be removing as many obstacles as possible to allow a business to succeed ethically in a global marketplace. You want to attack business corruption and not business. (At least I think that's what you want.) Why do we tax corporate income? They don't pay it, but we do at the cash register! It means that countries that don't tax corporate profits as much can out-sell domestic companies and it means that we can count on a net job loss. Some type of sales tax however would not only tax products from a domestic company, but also the products of a foreign company. We still pay it at the cash register, but since it effects foreign products equally, we don't have a net job loss. Hey, I'm all for capping the highest paid employee's compensation, (usually the CEO) to a multiple of the lowest paid employee's compensation. I'd like to see it no higher than 30 times the lowest paid employee, but I'm flexible. Do you think that might give the CEO of a company an incentive to increase the compensation for the lowest paid employee in that scenario? Devoish, I don't fault you as much for what you are for, as much as I fault you for what you are against. You can be against the corruption of business and I'll be in your corner. When you are against all business, I'll be your biggest enemy. When you are against investing, you are against business.

When you say that it's OK for the president to break the law because it's a bad law, I'm thinking screw GM if they ever want to issue a bond again. How's that helping the GM worker?

I think if you understood the long term effects of the government's actions with GM, you'd finally understand that the UAW is as screwed as GM is. It'll take a while but the company will eventually be too bankrupt for even the government to fix. 

Please don't tell me that the bondholders got a gift. I know in your world where if some investors are evil, all investors must be evil, it's OK for Mrs Tish to crash and burn in order to save the union. Per your statement, they worked for the company for most of their life and they deserve it. They are the little people that are always abused by the system. well Mr Tish worked all of his life too! He belonged to a union. He physically earned every dollar that he invested. The government had to break the law to take it away from his wife. If you support that, it's only a matter of time till they break the law to take money away from you too. You can't support corruption to fight corruption. It's only going to escalate the response from the other side. Do you wonder why the rest of us are looking for alternatives to the two ends of the spectrum? You 2 vindictive little girls care more about destroying each other than creating something to help everybody. In a perfect world, you'd destroy each other, but in this imperfect one, you are taking the rest of us with you.

Honestly devoish, figure it out. Get it together. Admit your flaws and work on real solutions to the flaws of the other side. As soon as you open your mouth to spit out that "The solution is to tax!" bite your tongue, understand that you are killing jobs, making it harder on workers, and killing the economy. You aren't contributing to growth, you are contributing to decay. You aren't helping the worker. You are killing him. You really want to help the worker? Get rid of income tax too! Tax him on what he buys instead! You'll encourage that worker to save and invest money. You'll help him in the long run. You like to use the excuse that the other side is trying to rig the system to make the average Joe spend above his means. Your side is actually rigging the system more. Stop taxing a guy's income and start taxing his spending. The guy that works more gets ahead and the guy that spends more gets behind.

Devoish, it's not so much what you are for as much as what you are against. That and the fact that you don't understand why you suck at economics.

If I ask you what you are for right now, you'd figure out a way to tell me what you are against.

Stop being political and start being real. 

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#38) On October 28, 2010 at 7:12 AM, devoish (99.10) wrote:

ChrisGraley

GM no longer has "legacy costs" they have been transferred to the union.

GM has a much better chance of achieving a $30bil market cap than a $75bil cap. - almost a lock to achieve $30bil, I would say.

We do not have Government run healthcare. We still have UNH, WLP, Aetna and a host of privately run companys involved in managing our healthcare dollars. You cannot buy a Federal, taxpayer funded plan because their is no such thing.

President Obama did not break any laws. The bondholders agreed to the deal they got because it effectively turned a total loss for them into a partial loss. Hurt most were the unions, whose pensions were gouged and are among the first to face the reality of being underfunded.

Once again, bondholders accepted this deal because it helped them avoid a total loss also. No laws broken, no theft committed.

Please stop exagerrating my statements. I never said Mrs Tish is evil, neither have I ever said that "if some investors are evil than all investors are evil". I did say her investment was a total loss until the Government negotiated a deal to save a portion of it. Congress was not bypassed they voted in favor of the bailout.

Changing laws to get behind employees requires Congressional action. It has not happened and laws have not been broken.

Hey, I'm all for capping the highest paid employee's compensation, (usually the CEO) to a multiple of the lowest paid employee's compensation. I'd like to see it no higher than 30 times the lowest paid employee, but I'm flexible - ChrisGraley

Well that statement will probably shock the entire CAPS world into cardiac arrest. You spend the next few years promoting that goal as hard as you have lobbied us for an end to minimum wage and you will be considered more the communist than I am accused of being. And if you achieve that goal first I would seriously be able to consider joining you and eliminating the minimum wage.

Your characterisation of a bondholder/union bailout as hurting the bondholders is way off base. It was as much a bailout for the small investor bondholders who typically did not hedge their investments as it was for the union. Your links point that out quite nicely, perhaps you should read and understand them.

And finally, you have been harping on this "what are you for" line of attack toward me.

I believe you are trying to ignore my posts by repeating that idea.

I am for singlepayer healthcare run by States not the Federal Gov. I have changed my position that the Fed should run it.

I am for returning income tax rates to what they were before Reagan.

I am for Government laws that support unions, and laws that root out corrupt union leaders.

I am against the Right to Work laws that gave TM a competitive advantage in the USA by helping them keep unions out and left their employees with less of a safety net during this economic downturn - A downturn that was exacerbated because money was concentrated into very few hands that had nothing left to buy but stock.

That combination, those tax rates plus strong unions achieved a 50:1 CEO:Lowest paid worker income ratio.

I am for requiring all consumer contracts to fit onto two - three pages. No room for the exclusions, exceptions, addendums, that are used to mislead and abuse those of us not studying contract law.

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#39) On October 28, 2010 at 11:07 AM, ChrisGraley (30.30) wrote:

GM still has legacy costs. They didn't get erased, because the union contract is still valid. They have been negotiated down in the past, but they are still higher than any other auto company.

It is almost impossible for GM to have a 30 bil market cap in the next 5 years with 60 bil in debt. 15 bil is damn near impossible in the next 5 years, let alone 30 bil. You say it's a lock. Your pulling that out of your highly political rear end.

We do have government run healthcare. It may be implemented by independent companies, but it is ran by the government. Instead of giving the unions anything, they can give up their equity stake and buy into the new Obama healthcare plan. They better buy it too, or we can fine them.

Obama broke several laws. You yourself admitted that the law didn't support the union's claim and yet they wind up with a bigger piece of the pie than the bondholders.

The bondholders didn't get bailed out of a total loss, the unions did. The unions owned stock which was totally worthless. The bondholders should only have taken a loss after the union was wiped out completely. The only reason that the union has any stake in the company today is because they bribed the right people. The bondholders only agreed to what they received under government pressure.

Changing laws to get behind employees does require Congressional action. It has not happened yet, so what Obama did was illegal. You can argue whether it was moral or right, but you can't argue that it was legal. The unions were owed nothing. They owned stock and not bonds. They should have got nothing or Congress should have created a law to give them something.

I don't think I've lobbied to remove minimum wage. I do think that I pointed out that it hurts the very people that you are trying to help. As soon as you set a minimum to pay someone, you create people that are unemployable because they can't produce enough to make that wage cost effective. I tried to explain that to you before, but you were busy trying to tell me to sweep my floor instead of giving someone a job. I don't think the CAPs community is going into cardiac arrest because of my statement that CEO's should be paid a multiple of the compensation of the lowest paid employee. I've said it several times before. You may not have been listening, but I'm sure they were.

As far as my perspective of the union bailout being way off base, there really isn't any perspective to take. The union was owed nothing. They were stock holders and only deserved the scraps that were left over after all the bondholder claims were paid. That is the law. The law was broken. I understand that and the links I posted support it. I'm not saying it's right or wrong. It's just the law. You have to know this. It's basic to investing. The government can't choose to enforce the law for only some of the people. The same abuses being made now will be expanded later and I'm willing to bet that the same people being rewarded by government corruption now, will be attacked by it later.

As far as your talking points about what you are for, you misread the statement. I said I don't fault you as much for what you are for, as I fault you for what you are against. But I'll address what you tell me you are for anyway.

You can't have a single payor system that is State controlled. The payor will always be in control. If the state creates any mandate that the federal government doesn't like, it will threaten not to pay.

Income taxes should not exist at all. Taxes discourage and taxing prosperity discourages prosperity. Tax spending instead and discourage spending. Admit that the current tax system causes people to spend above their means. This is what you were rallying against in the initial post, so stop being part of the problem and start being part of the solution. We've talked about this before and I'm totally for excluding things that would make this tax regressive. It's the right thing to do, but you ignore it.

Government laws shouldn't support unions above everyone else. They shouldn't support business over everyone else. Government laws shouldn't support anything other than basic human rights. Unions, business, religon, ect.. should all support themselves, legally and ethically.

I'm not sure why you are talking about the safety net of TM's workers in this economic downturn. Their employees still have jobs while GM's union workers killed their own jobs. If people truly had nothing left to buy but stock, there would never have been an economic downturn.

Tax rates plus unions = 50:1 ratio??? What orafice did you pull that out of? Taxes would have nothing to do with compensation ratios.

I'll one up you on the consumer contracts devoish. I'm for allowing written contracts to only be enforcable for purchases above $5000. For purchases below $5000 disputes can be handled in court by allowing a judge and jury to determine reasonable expectations for both parties. You can pay someone to read and interpret the contracts for your purchases over $5000 devoish. Buy a car or house or another major purchase and spend a little money on someone that can tell you what you are agreeing to.

Anyway, back to the crook Obama.The unions should have never been sitting at the table when Obama carved up GM like a turkey. They had no legal claim to anything. Like I said before, it pays to bribe the right people.

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